VOV.VN - Officials from the Ministry of Industry and Trade (MoIT) and US Ambassador to Vietnam Daniel J. Kritenbrink on June 12 participated in a public consultation to introduce the ministry’s proposal for direct power purchase agreement (DPPA) mechanism.

US Ambassador to Vietnam Daniel J. Kritenbrink speaks at the event.

The new policy looks to allow local businesses to procure electricity directly from private renewable energy providers and enable them to power their operations with 100 percent renewable energy, the US Embassy said in a media release on the same day.

During the development of the innovative mechanism, the Electricity Regulatory Authority of Vietnam (ERAV) under the MoIT consulted with investors, financial institutions, State-run Vietnam Electricity group (EVN) and its subsidiaries, private power producers, and other potential market participants to develop a successful DPPA pilot program.

Since 2017, the US Agency for International Development (USAID) - funded Vietnam Low Emission Energy Program has helped ERAV to identify the conditions needed to implement a DPPA policy in Vietnam.

The USAID support has followed three steps, including a legal and institutional review, a review and recommendation of DPPA models, and a roadmap for a DPPA pilot to test preferred models for suitability in Vietnam.

After recommending a DPPA design that suits the conditions in Vietnam on June 12, USAID is now working closely with ERAV to formulate the DPPA pilot program which, after final approval, will begin later this year.

“The DPPA mechanism will allow Vietnam to rapidly achieve its renewable energy goals by attracting private sector investment and meeting the needs of corporate leaders seeking to expand their operations in Vietnam,” said Ambassador Kritenbrink.

The DPPA mechanism is an enormous opportunity for solar and wind developers to mobilize private capital to build major new solar and wind energy farms.

Over 30 large international and domestic businesses represented by the Renewable Energy Buyers Alliance Vietnam are supporting this effort, and emphasized the critical need for accurate power market data to support low-risk transactions to power the clean energy revolution in Vietnam.

In addition to the DPPA, USAID works to support Vietnam in improving energy security through a series of utility scale solar and wind projects, providing technical assistance to the MoIT for energy planning, and working with the private sector to increase financial sources available to support the national vision for a clean and reliable energy system for the future.